Babylon——The story behind Babylon’s second round of financing of $70 million
lead:
Yesterday, Babylon's official Twitter account announced that it had received $70 million in funding led by Paradigm. This piece of news did not attract much attention in the current market sentiment, but I was very interested.
I first became interested in the Babylon project through a friend who told me that the "water" of this project was very difficult to obtain, and that at a certain period of time, many friends in the primary market who were interested in airdrops were scrambling to get it. Babylon is a blockchain project that does Bitcoin staking. I won't go into the details of the project here, you can check it out for yourself.
I initially paid attention to this project because I was optimistic about Bitcoin's staking track. It was not because I had any far-reaching investment vision to see the future of blockchain, etc., but because of the most fundamental principle - the profit-seeking nature of capital. At that time, the Bitcoin ETF was passed. We also said a lot at that time that the Bitcoin ETF changed the basic logic of Bitcoin and brought Bitcoin into the perspective of more investors, even institutions or companies. After the ETF was passed, institutions, retail investors, and companies in the United States will gradually hold more Bitcoin chips. The reason why the Bitcoin ETF was passed can be regarded as a compromise of the internal struggle in the United States, or as the powerful decentralization of Bitcoin. However, we have to admit that if the United States can pass the Bitcoin ETF, it must ensure the stability and controllability of this market in some aspects.
Capital is profit-seeking. When traditional financial capital targets Bitcoin, many contents about Bitcoin will be promoted. After all, Bitcoin itself is still too "single" and does not have much development potential. It can only start from the derivative ecology of Bitcoin. At the same time, the most important thing to do is to lock the stability of Bitcoin-related assets. Through pledge, the attribute ecology of pledge, etc., the funds under the Bitcoin ecology are more stable and more solid, so basically half of the funds in the crypto market will be controlled in the future. At present, we can see that the market value of Bitcoin accounts for half of the crypto market. What if the related assets on Bitcoin are calculated? This amount of funds may be more. Grasping the movement of the largest funds of Bitcoin means grasping the market.
First look at Babylon:
Because I hold the concept of bold imagination and careful verification, when I first came into contact with Babylon, I went to check the project, especially the main external personnel of the project. At that time, I used the information I looked up on the Internet, including 3 public leaders of the project, 2 famous Israeli entrepreneurs, and a Russian American. Of course, there may be some incorrect information on the Internet, but I did get these contents at that time. It was March 3, 2024,
According to my bold imagination, Israeli entrepreneurs reminded me of certain "consortiums", so I thought at the time that this project might be driven by a consortium of certain people.
Look at Babylon:
The reason why I paid attention to the Babylon project again came from Bloomberg. On May 13, Bloomberg published an article about investment institutions returning to "Professor Coin". In the article, from the perspective of crypto investment companies, there is a type of blockchain project called "Professor Coin". The specific reason is that its blockchain project is a blockchain project created by famous scholars or professors. And such projects have appeared frequently in the past two years, but venture capital institutions have a cautious view on such tokens, which will be discussed later.
When I saw this article, I looked up Babylon’s information again, and the main thing I found was that the project was founded by David Tse, a professor at Stanford University, and that last year two famous “professor coins” received high financing, Babylon being one of them, and EigenLayer, founded by Sreeram Kannan, a former associate professor at the University of Washington. Both projects are in the staking track, but the difference is that Babylon is anchored to Bitcoin, while the latter is anchored to Ethereum.
The controversy over “Professor Coin”
In this Bloomberg article, I saw the concerns of venture capital institutions about Professor Coin. Although some venture capital institutions are optimistic about the existence of Professor Coin, other venture capital institutions believe that scholars in Professor Coin are not "plus points" but "minus points" in blockchain projects. The reason is that scholars may not be plus points but minus points in the operation of blockchain projects, because scholars focus on academics and theories, but have poor business operations and practical capabilities.
Therefore, "Professor Coin" is controversial in the field of crypto venture capital, but it is currently known that EigenLayer, founded by Sreeram Kannan, a former associate professor at the University of Washington, has received a very high investment of US$100 million in February this year.
Bold guess:
Babylon received $70 million in financing led by Paradigm, which is also a relatively large amount of financing this year. Paradigm is also a top institution in the field of crypto venture capital.
Paradigm: Founded in the United States in 2018, the organization was co-founded by Coinbase co-founder Fred Ehrsam and former Sequoia partner Matt Huang. And Paradigm has invested in famous crypto projects such as FTX Coinbase and the well-known uni, so this round of financing led by Paradigm, which can raise 70 million US dollars, does not seem to be too surprising, and the endorsement is strong.
The fact that Paradigm led the investment actually indirectly overturned the inference about the drawbacks of "Professor Coin" that we mentioned above. Perhaps after Paradigm's lead investment, Babylon will gain higher recognition in both the venture capital field and other fields. Being led by a top venture capital institution is actually a disguised endorsement.
As for the 70 million USD in this round of financing, it is not important how much Paradigm invested, as long as the effect has been achieved. Paradigm’s lead investment is actually borrowing its endorsement. No matter how much Paradigm invested, at least Paradigm itself will be a winner.
There was an interesting saying in the financing circle before. Let the gentry invest in the first round, the common people and businessmen invest in the second round, and then use the money raised by the common people to let the gentry get the principal, and even get a certain dividend from the project. The top gentry just need to make a name for themselves, or even just avoid refuting rumors.
With the lead investment from top investor Paradigm, Babylon's financing path may be better in the future.
Possible drawbacks:
Currently, Babylon’s airdrop activities are still in full swing, and the “water” used in the activities is still hard to come by, but Babylon will still face many challenges in the future.
First of all, after raising a lot of US financing, how to issue in the US, if it is integrated with supervision, may be the most troublesome problem. It is known that EigenLayer, founded by Sreeram Kannan, a former associate professor at the University of Washington, blocked the issuance in the US and several other regions. Will Babylon continue this approach? Ethereum is different from Bitcoin. Once the main US and several other major regions are abandoned, the final effect may not be too good. So why do VCs still invest in overseas markets?
Does the massive investment from VCs also mean that Babylon has the ability or plans to overcome regulatory shortcomings?
Summarize:
Regardless of how great the technology the so-called "Professor Coin" can bring us, or how great the development of other technologies is, at least what we can see now is that capital is eyeing this project. Although I personally don’t have time to study its shorts, I will always pay attention to the follow-up activities of the project, not for anything else, but to verify whether my point of view is correct, and to see whether this capital "bet" is successful.
